White: Condo owners with short-term rental plans should beware

Changing policies could limit short-term rentals without helping to solve the housing crisis.

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If you are considering buying a condo to operate it as an Airbnb, beware that even if short-term rentals are allowed today, there is no guarantee the condo board and/or the city won’t eliminate short-term rentals in the future. Yes, it always “buyer beware!”

I was surprised to discover there are 4,321 Airbnbs in Calgary as of June 2023 and growing. That is the equivalent of more than 20 hotels with 200 rooms each that are 20-plus storeys high.

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Most of Calgary’s Airbnbs are in the city centre next to the major tourist attractions at Stampede Park and downtown. Calgary’s Airbnbs have on average a 71 per cent occupancy rate, which is considered a healthy hotel occupancy rate. Obviously, Airbnbs have become an important part of Calgary’s tourism ecosystem and a viable business.

But changes coming

In June, the City of Calgary passed an amendment to the Business Licence Bylaw relating to how short-term rental businesses, such as Airbnbs or Vrbos must operate as of Jan. 1.

New obligations include providing a fire safety plan and floor plan-related requirements. As well, applicants for a business licence must provide proof of the condominium board’s consent for the unit, or part thereof, to be used as a short-term rental. This will make it harder to receive a business licence for short-term renting in condos and give condo boards more power to approve or deny these business licence requests.

Indeed, getting condo board consent for short-term rentals has been becoming harder to get for several years — especially in condo buildings that are amenity rich. Many condo owners are reluctant about short-term guests using their gyms, lounges, communal kitchens and parkades as they often don’t abide by the rules. They are less likely to be concerned about letting strangers into the building, which is a huge security issue. As a result, more condos are changing bylaws to forbid short-term rentals i.e., anything less than a month.

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Also, with the advancement of technology, no longer does the Airbnb owner have to meet with guests face to face to give them the key and make sure the person occupying the condo is the person who rented it. Today, the absentee owner just emails the building code and door code and never actually meets the guests. This technology has made owning several Airbnbs a viable business for those with other jobs as there is no need to meet people at all times of the day.

Housing Affordability

Many popular European tourist cities are restricting short-term rentals as they increase the cost of housing for locals because condos and rental apartments are converted into Airbnbs, limiting the supply of long-term housing. However, in Calgary’s case, having Airbnb owners willing to invest in new condos buildings upfront is critical to the financing of new condos. I suspect the new Airbnb investors have been instrumental in the residential tower building boom for the past 15-plus years in our city centre.

However, I also suspect today many City planners and politicians are looking at the more than 4,300 short-term rentals and wondering if they were all converted into long-term rentals how that might help address Calgary’s current demand for more long-term housing.

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At the same time, the City wants to encourage more tourism with mega projects like the BMO Centre expansion, new arena, Glenbow and Arts Commons redevelopment. Calgary’s hotel developers would be hard pressed to replace the 4,300 rooms quickly.

A recent University of Calgary report found 74 per cent of Calgary homes listed on Airbnb and Vrbo are not permanent short-term rental but rented out only when owners are away. This means if short-term rentals were banned, they wouldn’t be returned to the housing market for long-term rental or ownership. It would have minimal impact on housing costs and availability.

Last Word

Like everything in city building, the approval, construction and management of a diversity of residential options to meet the needs of everyone is complicated.

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